Foundations should show they can police themselves

[Editor’s note: This is the second of two columns on changes needed in the foundation world.]

Pablo Eisenberg
Pablo Eisenberg

Pablo Eisenberg

Foundations typically reject any effort to add new regulations, and suggest they can regulate themselves.

Rarely has action followed the rhetoric.

Now may be the time for foundations to overcome their inertia.

Here are some ideas foundations should pursue to demonstrate they understand the need to change:

* Provide 50 percent of all grants in the form of general operating support and earmark another 25 percent for public-policy and advocacy activities.

The overwhelming majority of nonprofits say general-support money is their highest priority and what enables them to retain top staff members and become strong organizations.

In many cases, advocacy provides more bang for the buck than direct services and other programs.

Advocacy efforts help charities meet the needs of their clients and constituencies and are an important tool for nonprofit groups that seek to keep both government institutions and businesses publicly accountable.

* Make grants throughout the year, not just at a few specific times.

Foundations routinely grant money only two to four times a year, generally approving money only when their boards meet.

That timetable, however, often doesn’t meet the needs of nonprofit groups.

Why should the procedures of grant makers trump the requirements of nonprofit groups that do the actual work?

* Such rolling deadlines have already been adopted by several foundations.

Make the foundation’s mission a key element in deciding how to invest the foundation’s assets.

The $600-billion or more that foundations hold in their investments could make a huge difference in setting corporate priorities.

At least 10 percent of a foundation’s assets should be dedicated to mission-related investments.

* Provide sabbaticals to program officers.

Only the rare foundation routinely provides sabbaticals for its program officers.

Not only are sabbaticals an effective way to regenerate staff energies, enthusiasm, and loyalty, they could also be an opportunity for program officers to experience life among nonprofit groups, even their grantees.

Too often, foundation executives have lost touch with what it means to work at a nonprofit group, and some have never even worked for a charity.

In addition to such conventional sabbaticals, foundations might find it useful to include a three-month residence at a nonprofit group as a requirement for a new program officer’s first year in office.

* Operate frequent training sessions for foundation executives.

The Council on Foundations used to hold one or two annual training sessions for new program officers.

Those sessions focused much, if not most, of their attention on the relationship of foundations to grantees.

Nonprofit executives played a prominent role, both in formal speeches and by participating in discussions.

There were healthy and productive exchanges, sometimes sharp, between foundation representatives and nonprofit officials. Both sides received a good education.

In recent years such training sessions have been few and far between, rarely geared to spirited discussions with people from outside the foundation world.

* Create an ombudsman organization for foundations.

There is no place today where grantees or would-be grantees can go to complain about the way they have been treated by foundations.

Nor is there an institution to which foundation personnel can voice concerns about grantees, colleagues, and foundation practices.

The creation of an independent ombudsman organization financed by foundations but governed by a board composed of foundation representatives, nonprofit executives and academics could serve as such a place.

Partly a center to receive, investigate, and resolve complaints and problems, partly an institute to tackle ethical issues in philanthropy, and partly an organization to start an effort by foundations and nonprofit groups to improve their relationships, the ombudsman could serve as a means to reduce tensions between donors and grant recipients and to improve practices on both sides.

* Build career ladders for young people interested in devoting most of their lives to philanthropy.

Many of the best young people are leaving the foundation world, discouraged about their prospects for a foundation career, troubled by the indifferent treatment they have received by their bosses, and dismayed by the lack of change in the way foundations conduct their business.

Currently, few program officers stand a chance of heading a small or mid-sized foundation, let alone a large institution, regardless of their merits.

The selection process for such positions through search firms almost guarantees that only certified, well-known and safe candidates will be chosen.

To offset this process, a national clearinghouse for both open foundation positions and potential candidates should be established, making it possible for program officers, especially young ones, to know what is available.

Outstanding program officers should be encouraged by their bosses to apply for these positions.

For their part, foundation boards should periodically review with their CEO’s how their foundations have done in recruiting and promoting young program personnel.

* Schedule regular staff meetings with nonprofit representatives.

Too many foundations don’t meet regularly with either grantees or other nonprofit representatives.

Such meetings would educate foundation staff members about developments and problems both locally and nationally.

This discourse would be helpful in setting foundation priorities, and it would give the public a better idea of foundations’ programs and activities.

An open meeting once a year could be one way for foundations to reach out to the people they service, and in the process receive useful ideas and recommendations for change.

* Foundations should respond to all proposals they received.

Many nonprofit groups never receive a response to a proposal they have submitted to a foundation.

A prompt response to a proposal should be the minimum reply by a foundation, either declining the request or explaining the process for consideration.

In cases in which the proposal is turned down, a reason should be given for the decision.

With the advent of a new presidential administration and the collapse of the nation’s financial institutions, now is a good time to think about the future of foundations.

Taxpayers subsidize a substantial part of foundations’ efforts.

They should get their money’s worth.

[Related column: Time to push for changes in how foundations operate]

Pablo Eisenberg is a senior fellow at the Georgetown Public Policy Institute.

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